Auto supplier Key Plastics LLC has filed for Chapter 11 protection with the U.S. Bankruptcy Court in Wilmington, Del., as part of a reorganization to trade debt for equity.
The Farmington Hills, Mich.-based company which emerged from Chapter 11 under new ownership in 2001 had announced in November that it had reached a deal with creditors holding 90 percent of its long-term debt to trade that debt for equity in the company.
The Dec. 15 Chapter 11 filing is part of that prepackaged reorganization plan, said Kevin Koshowsky, director of human services for North America.
``The global automotive industry is going through a period of historic change, and Key Plastics is taking the necessary steps to position the company to succeed in the dynamic global business environment,'' Ralph Ralston, president and chief operating officer, said in a news release.
Key expects to re-emerge by the end of January, and said it has secured financing to continue regular payments to employees and suppliers, and will continue delivering parts uninterrupted, Koshowsky said.
Key also is cutting jobs in France and Slovakia and has entered court protection for its French facilities.
The company molds a variety of interior and exterior trim. It entered Chapter 11 for the first time in 2000, bogged down by the costs of a series of acquisitions that took place during the 1990s. Under new private ownership led by Edward Ewing, the company re-emerged in 2001 and expanded into Europe and China, but now needs to restructure again as the global auto industry contracts.
The reorganization is supported by creditor Wayzata Investment Partners LLC of Wayzata, Minn., which is providing $20 million in debtor-in-possession financing for day-to-day operations. Those funds also will be available for future liquidity after Key emerges, if they are not tapped during the Chapter 11 process.
Key estimated debt in excess of $100 million in its court filing. Its top unsecured creditors included BASF Corp., with $1.4 million in trade debt and Jing Mei Automotive USA Inc., which operates a distribution and logistics center in Schiller Park, Ill., with $1.3 million in trade debt.